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There is exciting news for the economy as the U.S. GDP grew at a rate of 4.1% for the second quarter of 2018. It is the fastest growth rate in almost four years. This reflects the jump in consumer and government spending. This should not be a surprise as we have talked extensively about deposits and liquidity in our improving economy. It is clearly evident consumers are spending more.

The pace of home sales continues to decline. Predictive economists are discussing potential bubbles in the housing market. One major factor is consumer sentiment has declined in the last six months. The University of Michigan Consumer Sentiment Index declined to a six-month low in June. This may be part of the reason that we see some concerns in the housing market. We continue to see high demand and rising interest rates which both will affect the housing market as we go forward.

The FOMC is announcing on Wednesday their decision on many activities. We expect that the Fed will leave rates unchanged at this meeting. However, there is a much higher likelihood that they will increase the Federal Funds rate to 2.25% at the September 26th meeting. Additionally, we expect they will continue to decrease the amount of purchases in their quantitative easing portfolio. Please look for an interest rate update from us Wednesday afternoon.